Dutch Economic Outlook Worsens

AMSTERDAM, 15/08/13 - The outlook for the Dutch economy has worsened since June. GDP will contract faster than expected this year and the recovery in 2014 will lag behind earlier expectations, according to the latest forecasts from the Central Planning Bureau (CPB) published Wednesday.

According to the CPB, Dutch GDP will contract by 1.25 percent this year, before growing by just 0.75 percent in 2014. Last June, the Planning Bureau was projecting GDP would shrink by 1 percent this year and grow by 1 percent in 2014.

The cabinet’s independent statistical experts have not taken the extra cutbacks that the cabinet has in store for 2014 into account in their latest calculations. The government plans a net 6 billion euros of extra cutbacks to meet the EU budget deficit ceiling of 3 percent of GDP.

Unemployment will rise faster in 2013 than the CPB was anticipating last June. The Planning Bureau is now projecting 35,000 extra unemployed persons.

The budget deficit will turn out at 3 percent this year, according to the CPB. This is better than the 3.5 percent deficit it expected in June

For next year, however, the outlook for government finances worsens. Without extra measures, the deficit will rebound to 3.9 percent of GDP. In June, the figure expected was 3.7 percent.

Finance Minister Jeroen Dijsselbloem said however that the cabinet will not make extra cuts on top of the 6 billion euros already announced. The cabinet will not be “dogmatic” in pursuing the EU budget deficit ceiling of 3 percent, he said.

The figures on the Dutch economy are “not surprising, but disappointing all the same, because you hope that the economy will recover more quickly,” added the minister. The situation on the housing market is the biggest problem, according to Dijsselbloem, and has “an enormous negative effect on consumer confidence.”

The cabinet savings package will be a combination of “smart savings at the government and as little as possible in increased taxes, and such that work continues rewarding and companies are stimulated to invest.” The Labour (PvdA) minister also announced that the cabinet will announce measures on Prince’s Day (Budget Day) to get the housing market going again, but gave no details.